The EC found that Ireland had substantially and artificially lowered the tax rate Apple paid in the country for more than two decades, thanks to two tax rulings Ireland issued to Apple starting in 1991 that allowed for a split of Apple Sales International’s profits for tax purposes between its Irish branch and its head office.
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“By forcing their member states to retroactively impose taxes on USA companies, the European Union is unfairly undermining our ability to compete economically in Europe while grabbing tax revenues that should go toward investment here in the United States”, he added. In a statement posted on the Apple site, the company says the claim has “no basis in fact or in law”.
“The opinion. alleges that Ireland gave Apple a special deal on our taxes”.
Tim Cook posted on Apple website: “We never asked for, nor did we receive, any special deals”.
The letter went on to claim that Apple should pay the bulk of its taxes in California where almost all of its research and development is carried out.
The total amount that Apple may have to pay will depend on how the ruling is actually enforced. With major tax reforms on the horizon in the States, if Apple, or any other U.S. multinational for that matter, is forced to pay back taxes within the European Union, the pool of potentially taxable profits sitting in foreign accounts would be severely diminished.
The European Union (EU) said USA tech giant Apple must repay up to 13 billion euros (US$14.5 billion) to the Irish government after ruling that some tax treatment granted by Ireland to Apple was illegal under EU state aid rules.
Meanwhile, Irish Finance Minister Michael Noonan said that he “disagree [s] profoundly with the commission’s decision”.
Cook says that Apple has been a supporter of tax reforms, but only when looking forward. In a controversial tax evasion case filed against Apple, the EC had made claims that the Irish #Government provided favorable and flexible terms to Apple in order to attract more jobs and financial investment in the country.
Apple said it was confident of winning an appeal.
Noonan is willing to go so far as to fight for the right to not collect the back taxes, in efforts to keep the business that Ireland has secured with Apple. The report also claimed that the European Commission’s handling of the possible tax avoidance issues were “inconsistent with global norms and undermines the worldwide tax system”.
“But every country’s tax rules are different and Apple will be a much more significant multinational in Ireland than it is in New Zealand”.
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It warns the decision “will have a profound and harmful effect on investment and job creation in Europe”. Apple, Ireland and the United States all agree on this principle.
